Supply chain efficiency determines competitiveness

Agents must provide global reach RAY SMUTS A KEY prerequisite for local service providers in the quest to maintain customer satisfaction and provide sustainable returns in the long term is to provide consistent service on a global basis. To achieve this relationships with international players are being replaced by new partnerships in the drive to attain global coverage, says Richard Ferguson, CEO of GAC Laser International Logistics. He speaks from experience, having participated in the recent formation of a new joint venture, GAC Laser International Logistics, between South Africa’s Laser Logistics and Gulf Agency Company (GAC), an international Dubai-based logistics operation. Ferguson makes the point that in order for local service providers to meet the requirements of their customers they need to provide global reach which is complemented by a range of value adding services such as trade finance, warehousing and distribution. These have become part of most international logistics operations and are often characterised by focus on niche markets and involve creative solutions to meet particular customer requirements. This has resulted in moves into new business areas not previously serviced by traditional logistics operators – like event management and security. “Going forward, the continued existence and success of local international logistics operators appears to rest on their ability to leverage off the new international partnerships and create fresh solutions, in non-traditional or emerging logistics activities which satisfy customers’ needs, and then convert the opportunities into economically sustainable service offerings,” says Ferguson. “One of our major challenges will be to secure the new skills necessary to provide the new solutions and service offerings in order to complement the existing technical skills required to perform the traditional core activities.” Ferguson adds that speed in delivering cargo is of the essence for the international logistics service provider, confirming a growing trend in which a customer’s competitiveness is often defined by the efficiency of his supply chain, effectively resulting in competition between supply chains rather than between customers. This, he says, is occurring against a backdrop in which the traditional core activities of freight forwarding and customs clearing are characterised by a number of factors. These include significant numbers of players in the South African market, with margins being squeezed by the big players in the industry, most notably large multi-national customers as well as shippers. Also evident is the consolidation of or collaboration between service providers to provide global reach with integrated end-to-end solutions. Another factor which has a bearing is the implementation of Transnet’s national logistics strategy, designed to promote economic growth by reducing the cost of doing business in South Africa by lowering logistics costs from the existing 14% of GDP to the significantly lower international benchmarks.